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Industrial Hemp – Now Legal and Unregulated in Michigan

On November 6, 2018, Michigan voters approved Proposal 1 and made Michigan the twelfth U.S. jurisdiction to legalize recreational marijuana. The Michigan Regulation and Taxation of Marihuana Act (MRTMA) went into effect December 6. What has been lost in all the smoke from the past several weeks is how MRTMA impacts the regulation of industrial hemp.

Industrial hemp, as generally defined in federal and by other states, is a low THC-concentrate version of the plant genus cannabis, such that ingesting it will not produce psychoactive effects. Hemp is commonly grown as a fiber crop for use in such things as paper and textiles. Hemp seeds are also becoming a marketable commodity, as the seed and its oil are incorporated into health foods, supplements, cosmetics, and medicine. Estimates suggest that industrial hemp could generate returns of $200-$400 per acre.

Michigan authorized the cultivation of industrial hemp for research purposes in 2014 through the Industrial Hemp Research Act (IHRA), with responsibility for administration of the act given to the Michigan Department of Agriculture and Rural Development (MDARD). The Public Health Code was also amended to except industrial hemp from the definition of marihuana. Under both acts, industrial hemp is defined as “the plant Cannabis sativa L. and any part of the plant, whether growing or not, with a [THC] concentration of not more than 0.3% on a dry weight basis.” MCL 333.7106(2); MCL 286.842(c). Under IHRA, however, only MDARD and Michigan’s colleges and universities are permitted to conduct industrial hemp research. Despite these changes in Michigan law, “industrial hemp research has never gotten off the ground.”

Like the aforementioned acts, industrial hemp is not marihuana under MRTMA. However, MRTMA defines industrial hemp more broadly than the other two laws to mean

“a plant of the genus cannabis and any part of that plant, whether growing or not, with a [THC] concentration that does not exceed 0.3% on a dry-weight basis, or per volume or weight of marihuana-infused product, or the combined percent of [THC] and [THC] acid in any part of the plant of the genus cannabis regardless of moisture content.”

MCL 333.27953(c). More importantly, “[n]otwithstanding any other law or provision of [MRTMA], . . . possessing, cultivating, processing, obtaining, transferring, or transporting industrial hemp” is legal. MCL 333.27960(1)(i). The authority to regulate industrial hemp is given to the Department of Licensing and Regulatory Affairs (LARA). MCL 333.27958(2)(b). Thus, as of December 6, 2018, industrial hemp may be legally grown, processed, and sold in Michigan. Moreover, because LARA has not promulgated any rules regulating industrial hemp, these activities are currently not subject to any regulations.

By its terms, MRTMA greatly expands what had been the state’s limited authorization of industrial hemp. While Michigan’s constitution restricts certain methods of amending statutes, the enactment of “[a]n act complete within itself, even though amending another statute or act by implication, is not one of the evils sought to be prevented by” the constitution. Weber v Orion Bldg Inspector, 149 Mich App 660, 664 (1986). It is fairly evident that MRTMA, by creating a new, independent statute and expressly making other laws inapplicable to it, is “an act complete within itself.” As such, MRTMA implicitly amends IHRA and serves as the enabling statute for industrial hemp regulation.

That said, there is a package of bills (Hemp Bills) pending in the legislature that seeks to provide for licensing and regulation of industrial hemp growers by MDARD by amending IHRA and the Public Health Code. However, as noted above, MRTMA supersedes IHRA’s limited authorization and regulation of industrial hemp. The amendments proposed by the Hemp Bills therefore would amend by implication MRTMA’s broad authorization of industrial hemp and LARA’s authority to regulate it. But as an initiated law, changes to MRTMA require three-quarters supermajority support from both legislative chambers. Therefore, unless the Hemp Bills receive such support, their amendments to IHRA, the Public Health Code, and now, by implication, MRTMA will likely be invalid. Moreover, any rules promulgated by MDARD pursuant to those amendments would likewise be invalid as MRTMA empowers LARA, not MDARD, to promulgate rules regarding industrial hemp. (Whether MRTMA’s delegation of hemp-related rulemaking power to LARA is itself valid is another question). On the other hand, the Hemp Bills may be invalid even with the necessary support under cases dealing with amendments by implication of the Michigan Medical Marihuana Act (MMMA). SeePeople v Latz, 318 Mich App 380 (2016) (holding that the MMMA preempted subsequent changes to the Michigan Vehicle Code imposing additional requirements on the transportation of medical marijuana).

As it stands today, the commercial cultivation, processing, and sale of industrial hemp is legal and unregulated in Michigan. The caveat is that rules could potentially be promulgated by LARA pursuant to MRTMA, perhaps imposing licensing requirements and restricting the industrial hemp market. It is unclear at this time if or when rules are coming or how those rules would regulate industrial hemp. Consequently, those who take advantage of the current regulatory environment—or lack thereof—may find themselves subject to and incompliant with future regulations.

As always, check back with Dykema’s Cannabis Law Blog for further updates.